Hiring

We’re in the process of onboarding the first batch of employees at Admazely. It’s pretty awesome. Because they’re pretty awesome. There’s four of them in addition to the founding team but I’ll get back to that.

The process of finding, vetting, convincing and onboarding them has been one that has given me a lot of things to think about when it comes to the people I want to work with and the company I want to create.

I think some of it might be useful for other startup founders looking to expand their teams. And maybe to people thinking about joining Admazely some day.

The hiring process for a startup
First let me talk a little bit about the hiring process for a startup like ours. It’s tough in many ways and it’s a really delicate balance in so many different ways.

For instance, once you’ve raised money you have VCs breathing down your neck to deliver results. So you need a team in place the second you’ve raised. But of course you cannot bring the team onboard before you have the money. On the other hand, you cannot afford to wait until you have money before you start recruiting. Dilemma!

We tried to strike the balance by starting our recruitment process in November or December of 2011. Before we had a term sheet from our investor. But we felt pretty comfortable that we would get one and raise money, so we started talking to people, knowing that it would take time to find the right people, time for us to convince them and for them to convince us. So we represented a certainty of securing our funding that we didn’t always feel ourselves entirely. We didn’t lie to anyone about our financial position. Ever. But we made sure to let candidates know that we were confident about the prospects of getting the money we were looking for.

Even though we started early, we ended up learning a very hard lesson: hiring takes time. It takes a hell of a lot longer than you expect. So start early and be prepared to spend a ton of time and energy on it.

Another balance surrounding the timing aspect is finding the right people and finding them quickly enough. The better people the harder to find and convince them. The A players (I hate the term but haven’t come up with anything better myself – so will use it for now) are rarely out there looking for jobs. We decided to approach them. And be where they are. To build a brand in the developer community for ourselves and Admazely. We talked to people we believed to be great. Asked them for advice and connections. Invited strangers in for coffee on the odd chance that they might be a good fit – or know someone else who could be. We built relationships with people we might not want to hire now but would consider working with down the road.

And we decided early on that we didn’t want to hire people that weren’t A players. I believe that this was probably the most important decision we made because it ended up determining our approach to everything. It meant that we accepted taking battles with our board for not meeting our hiring deadlines (and consequently our development deadlines – because obviously we expected things to move faster). It meant that we turned down some very talented people. We literally interviewed more than one hundred people. We probably looked at close to a thousand CVs, Github repositories and LinkedIn profiles.

I don’t know if it was worth it. But I hope so. The next few months will probably prove me either right or wrong.

The company we’re building
Asking someone to join your startup is asking them to take a huge leap of faith. No matter how obviously brilliant your idea is, it’s an extremely risky bet for an outsider. We kind of knew but found out that we really had to learn to tell our story in order to get potential colleagues excited about what we’re building. It takes careful thinking and it takes practise.

As we talked to each other and as I pondered the answers to the many questions people asked us, the vision for what I wanted to build emerged.

Talent
Throughout my career (before Admazely) I’ve hired quite a few people, either as a hiring manager or as part of a group selecting a candidate for a given role. Probably around 30 or 40 in total. And I’ve worked with a few hundred people across the companies I’ve been at.

The difference between the exceptionally talented individuals and the kind-of-talented people has been an order of magnitude. Working with brilliantly bright people is so much more fun and rewarding. Working with the highest calibre talent means getting so much more done. It means getting to solutions that are significantly better.

Before Admazely I probably hired less than a handful of people that I believe to be of that calibre. There are a lot of fair reasons for compromising when in a hiring situation. One could be that you’re pressed for time – that there’s a project I desperately needed staffed. Or that the applicants I’ve received simply weren’t any better and it felt as if I needed to choose between them.

And every time I chose someone not awesome I knew it at the time. I was rarely honest with myself – came up with explanations that he or she had a bad interview or that I was just too sceptical – but every time it came back to bite me in the ass. And the handful of people that I got right proved that being ultra diligent is indeed worth the effort.

So early on, we set the barrier of only wanting to hire extremely talented people. I know that every startup founder says that he or she has a world-class team. They rarely do. They are fooling themselves and trying to fool everyone else too.

When I look around our office this morning and see the people in the room I only see people that are capable of doing things that I will never be. Computer scientists and mathematicians. PhD’s and dropouts. Students and scholars. Everyone here was coveted or highly appreciated by good companies when they decided to join us.

Attitude
In my opinion as important as talent. The knee-jerk reaction for most companies looking to fill a role is to look for someone who has done the job before. It used to be my starting point. Because that way you’ll feel confident that the person you hire can do the job. The problem with this approach is that you get people who are not stepping up to a new challenge. You get people who can essentially switch on their autopilot. You get people who take a job with you because you offer a better salary, better perks, your office is closer to home, their old boss was an asshole, etc.

I look for something entirely different today. I look for people who have done something that has given them a foundation for doing what I want them to do here – but who need to take a significant step to do what they need to do here.

In one case that has meant needing to learn a new framework (node.js), which was entirely acceptable because this individual has the concept of minimalistic evented architecture deeply ingrained in his development DNA. In another case it has meant needing to learn to work in an agile team environment after only working solo, which was entirely ok since this individual has curiosity and eagerness to learn-and-teach written all over him.

It has meant challenging people to take more personal leadership of themselves. More responsibility for product architecture.

In essence I have only hired people who have a little something to prove. To themselves or to the world. A little chip on their shoulders. Willing to take a risk. Willing to optimise the level of the challenge in front of them, not the stack of money going in to their bank account every last-of-the-month.

People with substantial egos who look a the proverbial Mount Everest and boldly claim that “of course I can get up there!” without knowing all of the unknowns in the equation first.

So while we are a quite diverse team when you look at backgrounds, we are quite similar in that one respect.

Our new guys
As I mentioned in the beginning of the post, we took a pretty long-haul approach to finding the right people. Not a single one of them are the outcome of a traditional job-posting-and-application-process.

Ollanta ended up on our radar via David’s Stockholm network. He was bored in his current job and looking for a challenging adventure. He (almost) majored in physics and math and minored in computer science. He took machine learning courses at Standford in his spare time. For an improvised six-hour programming challenge, he wrote an evolutionary algorithm in Haskell on a train ride from Stockholm to Copenhagen. The sheer combination of talent and self-confidence He’s the funniest Swedish guy I’ve met (yes David, he’s funnier than you). One of his interviews was a 48-hour session in Copenhagen that famously saw him getting shitfaced-drunk with Sylwia and David before and after a round of marathon pair-programming.

I was introduced to Chris via a person whom we interviewed and with whom we had very elaborate discussions about joining us. We maintained a close conversation and because we had managed to convey a small bit of our vision and enthusiasm, Chris started talking to us. Despite being a Java-programmer at heart he has maintained his curiosity experimenting with NoSQL databases and a bit of Ruby. And he’s the Giorgio Armani of code: less is more. He’s anal about this stuff and that’s why it’ll be so awesome to have him and David co-architect our platform. The fact that he founded (and obviously bankrupted) a micro beer brewery does make me doubt his sound judgement sometimes.

In early June, David gave a guest lecture on node.js at the Computer Science Department of Copenhagen University. It was a cool afternoon. Lots of people there, lots of interesting questions and discussion. Afterwards, Nicolai came and talked to us. His opening line was “well, once there’s a talk at DIKU (CompSci Dept @ Cph Uni) on something, you know it’s becoming mainstream – so I suppose node.js is officially rubber stamped now”. As a third-year student (interrupted by a year of fulltime work) his unpolished talent is second to only his self-confidence.

Being very active in the node.js open source community, David has a good overview of it. And that’s how we got in touch with Andreas. Still a high school student we were surprised to see the level of quality in his code and the fact that he was contributing to some of the core modules in node.js. Curious as we were, we invited him in for coffee (proverbial coffee since he doesn’t drink the real stuff) wanting to get to know him. He already had a work-remotely-gig lined up, but we figured that he might want to sit amongst other people working rather than sitting at home (we already have a another very gifted javascript programmer in a similar situation sitting here – we like to think it’s good karma). As it turned out, he liked us and vice versa. And now he’s part of the team.

Afterthoughts
For us hiring is an ongoing process. We’re hoping to hire more people within the next few months and we’re already talking to some of the ones we are considering. And whom we hope are considering us.

An important difference now compared to six or nine months ago is that we now have a pretty clear way to articulate what we’re looking for and what we have to offer. We’ll still be having a lot of informal coffee-talks (or first dates if you will) with people. Some we won’t want to hire and some we might consider. But I have come to realise that one of my most important tasks is to facilitate that we talk to the best people. So we know them and they know us.

I would encourage every startup founder to do the same.

Startup milestones

So - we recently raised money for Admazely. A good occasion to share some thoughts on the great parts of entrepreneurship. There are tons of ball-busting, teeth-grinding and knuckle-biting parts of being a startup. But when you've just raised money and are looking ahead at (hopefully) years of fulfilling your dream, the sun tends to shine a little bit more. So I'll focus on the sunny side in this post.

A while ago I read a blogpost that stuck with me. Embarrassingly, I have forgotten the author and thus can’t link and attribute appropriate credit. However, I do recall the central thesis of the post. It was simple. As a founder you have three major milestones in the early days of your venture:

1. The first person you convince to join
2. The first customer you convince to pay
3. The first term sheet

And it is so true. Each of those three are immensely fulfilling and gratifying.

Cofounders
I started out with a drawing on a piece of paper. Talked a friend into helping me turn that into a design prototype. Talked another friend into helping out with a simple proof of concept for the hard math part of my idea. Both gave a good gut-feel but it was still just me and an idea with a lot of potential.

I started my hunt for a technical cofounder. And I had no idea what the hell I was doing. Still not sure I do, but I think I’m less embarrassingly awful at talking to computer scientists now than I was a year ago. It's a process that has seen a lot of write-ups lately, including this moronic post on TechCrunch. It's a tough process. I speed-dated a lot of people, rejected a lot of them and got rejected by a few as well.

Then I met Sylwia and David. Both of them seemed to have better things to do at the time. Sylwia was freelancing while considering an offer from a well-funded startup. Instead she agreed to spend her days in my living room doing our first website and and a very very rough user interface. David was supposed to go to San Francisco for a paid internship before completing his computer science degree in Stockholm. Instead he came to Copenhagen for a few weeks, which turned into him moving in with me, both working and sleeping in my apartment for a few months. And not going to SF.

Seeing such bright and talented people chose to work alongside me seeking out the potential of an idea was immensely cool. The trusted me to make my part of our venture happen (identifying customers, talking to them, understanding what we needed to build, knowing how and when to raise funding etc.) while they applied themselves, building the product. Experiencing the change in them and in our collective thinking as we started to share a vision for what we wanted to build. And after a while I asked – and they accepted – to become cofounders of Admazely with all of the responsibility that entails.

A while in, we convinced Søren to try and work with us as well alongside his day-job at SAS Institute. Spending his spare time on Admazely instead of spending it with his wife and his newborn son wasn’t an easy decision. But he started contributing and made commitments to the project and the team.

Wow – it was pretty awesome. Things kicked into gear. It truly was a milestone for me as a founder. At the time I was too busy moving forward to pause and appreciate it. Looking back at it, it feels great. And I really encourage anyone starting up to allow for a pause to be pleased with that kind of significant progress.

Our first customers
I like the idea of the Lean Startup. I like the concept of validating your idea with customers as early as possible – ideally even before you start building it. And that’s what we did. We took the prototype to potential customers to get feedback. And feedback we got. But not only the kind we were expecting. While we were hoping for opinions that could guide product development (and we got that in abundance) we also had potential customers actively asking when they could get their hands on what we were building.

So to validate that they weren’t just sweet-talking us we asked them to sign agreements committing to buy once we were done building. And they did.

All of the sudden things became a lot more real. We weren’t just building a product – we were building a business. Real people putting their money where their mouth was.

I’m a commercial guy. I like selling stuff. And while I knew my original idea was good, this felt fantastic.

Our first term sheet
If you read blogs or TechCrunch or other stuff like that, you get the impression that VC drive around throwing truckloads of money at any entrepreneur with his hand out. They don’t. Period.

I know a lot of really smart people, with great ideas, working their asses off to realise that idea. Trying to raise money but failing. For every entrepreneur able to raise money there are 100 who are trying but failing. While the investment market in Silicon Vally and New York is supposedly frothy, the same cannot be said for most of Europe. So I agree with those that say that the best thing to do is to move to where the capital is. Partly because… well, it’s where the capital is. And partly because capital tends to cluster around talent. Or is it the other way around? So you’ll also have a better pool of talent to recruit from after fundraising.

Fairly early on we realised that we wanted to try and build Admazely big. That we didn’t have the patience to grow it organically and wanted to raise money to accelerate the development speed and quality.

We talked to potential investors. I’ve been part of a team raising money before, but I’ve never lead the effort. It’s hard work, it’s stressful and it’s people jerking you around. Networking, calling, emailing. Iterating your pitch deck. Preparing a demo. We did some things right and we did a lot more things wrong. Luckily a few of them were interested, so we set a deadline for when we wanted to receive offers. And in mid January we received our first term sheet.

Venture capitalists by definition invest in startups. Nevertheless it’s still pretty daunting to have someone who sees hundreds of startups and only has the bandwidth to make a very limited number of investments decide that YOU are his pick. To get an offer for investing in your dream. To have skilled professionals say that they believe that you and your team can build a huge company.

We chose that we wanted to work with SEED Capital, we negotiated the term sheet, signed it, worked through the due diligence and the investment closed. The press release can be found here.

Negotiating an investment is scary and tough. No matter how well you prepare, you can be certain that the VC knows more about these types of deals than you do. I highly recommend preparing. Read Mark Suster's series on raising venture capital, have a look at some of Chris Dixon's stuff, read Venture Hacks, go to Term Sheet Battle or watch the Malmö event on YouTube. Have coffee with people you know who have tried it before. If you have no one else to talk to, ping me on Twitter.

We ended up with an agreement that we are very happy with. Obviously we didn’t get everything we wanted but frankly; that’s the nature of a negotiation. But we got a deal that enables us to do what was most important to us: to build Admazely.

It’s validation and it’s hard not to get a little giddy. At the same time it’s immensely humbling. All of the sudden we are responsible not just for doing what we want to do but also for doing what the other shareholders want to do.

According to the aforementioned blogpost, it’s the final of the three milestones that an early stage startup will experience.

Now we’re moving on building the company and the product. As my old colleagues in London always said: onwards and upwards. It’s fucking awesome!

Great teams at Startup Bootcamp Investor Day

Attended Startup Bootcamp Investor Day on Thursday. Great group of startups overall. Good pitches. Loved the venue.

Some general comments after seeing eleven kick-ass pitches in less than three hours:

Pitch structure
Everyone – without a single exception – used the same build-up: Overview in 30 seconds, define the problem, describe solution, demo, describe market, describe business model, try to prove traction, present team and say how much you are raising.

A good structure – but I think that having one or two deviate from that formula would have been good. Maybe some of the more rock’n’roll teams like ONEloudr or Balcony TV.

Everyone had only one team member present. Everyone used the same psychology trick of stating their fundraising success / traction as a fact (”we are rasing X / we will achieve Y users in the next Z months” as opposed to ”we are looking to raise X / we expect to achieve Y users in Z the next months”). A bit cheeky when you see eleven people in a row using it.

The mentors were another thing that I think could have been better. During Investor Day that is. I am certain they were invaluable during the three months. On Investor Day, most of the mentors did a high-level description of the businesses. But hey - the teams were doing that 30 seconds later, so why waste your time on that.

They could have talked about the stuff that the teams themselves couldn't say. Like how this particular team worked so hard that they did morning scrum every day at 8am and night scrum every night at 10pm. Or how the CEO has a unique insight into their particular market that makes everyone want to work with him/her. Or how the lead developer chose to work on this startup instead of accepting that offer to go and work for Google in Silicon Valley. Things that investors are looking for in teams when they consider investing.

Their asks
I don’t think that companies like Balcony TV, TrialBee, Briefix or Nippo need to raise a whole lot of cash to break even. But every single team came out with a fairly small ask to the investors. Even the ones that by nature are swinging for the fences like Archify or Eyeproof.

That didn’t make a lot of sense to me. Both of those two should – in my opinion – raise >5m euro.

Those two had the potential to beef up their apperance. And especially Archify whose founder has an exit under his belt should either bankroll the next 12 months himself or with the current angel investor – or make a big and bold ask. You are looking to change an industry, so don’t waste your time raising petty cash.

My verdicts
So – I talked to Alex Farcet over a beer the other night and I asked him which teams he thought to have high likelihood of succeeding. Obviously he didn’t want to say. But he told me to see for myself so we could compare notes. Maybe he was just making conversation and being evasive. But I like to think that other people value my opinion, so I took as an encouragement.

I thought: screw it – I’ll do it publically, so everyone can ridicule me later on, when I’m 0 for 11 in my predictions.

To keep it simple (and to not spend two weeks writing this) I’ll do it in a Twitter-friendly format.

Disclaimer: I greatly respect all of these startups. I am in awe of the effort that they have put into their ideas over the last three months. In no way do I mean to disrespect them, their abilities, their intellect or anything else. However, stats suggest that only two or three of them will be around in 18 months. And maybe – maybe – one of them will make it big.

Who the f... am I to think I should be judging these hard-working people? I'm no one.

So take it for what it is - a fun read. These are my best guesses, but the comments section is there for you to argue against my views. I haven't researched each startup and I don't know a lot about many of the industries they're in.

Note: likelihood of success does not mean raising a seed round (which I think that 60-80% of them will) but actually succeeding in building a huge business.

Archify – swinging for the fences means binary outcome. Will change search or go down in flames. Strong team but mission impossible. Likelihood of success = 3

BalconyTV – high-engagement platform but no barriers-to-entry for comp. Dependent on local representatives’ networks. Likelihood of success = 5

Briefix – solving a problem that others have already fixed. Also, don’t address the real issues in customer adoption for B2B tech. Likelihood of success = 1

Groupstream – cute but a FNAC. Facebook could build this in an afternoon and loks 99% like 10,000 other apps out there already. Likelihood of success = 1

Supermama – awesome. Addressing an underserved market. Business model is proven, so can copy 90% from Facebook etc.. Likelihood of success = 9

Nippo – solving an important collaboration issue but in my view betting on one feature. Quick exit to GumTree? Likelihood of success = 3

Trialbee – real problem, huge market, simple business model. Can they overcome archaic mindset of pharma? Likelihood of success = 8

ONEloudr – niche within music industry. Have done their homework on IP and copyright and carved out a good niche. Likelihood of success = 7

egoArchive – nice app but a FNAC. No business model. Google will offer this for free soon. Likelihood of success = 1

Eyeproof – if hardware works they’re off to the races. Huge industry that’s booming. Desperately need a VP of sales. Likelihood of success = 9

VideoAvatars – ad format that’s hard to use well. Never rely on media agencies for distribution. Likelihood of success = 2

PlayerDuel – are relying on players who are losing duels to pay to lose more. Works for casinos but not so sure. Likelihood of success = 4

That’s it. Once again let me emphasise that I have the outmost respect for the teams. It's been blood, sweat and tears for the last three months. And they have made impressive accomplishments. The above is nothing but my Monday-morning-quarterbacking. So if you are one of these teams, please prove me wrong. And I'll buy the drinks next time I see you (even though, in that scenario you don't need me to buy you drinks...)

And if it makes you fell better, use the comments section to write the reasons why Admazely will never succeed. Odds are stacked against us - like any other startup. So there's a good statistical chance that you'll end up being right.

What variables are in your market equation?

I have been talking to a few people in the past days about unIQad. It has been great to get more people’s thoughts on what we’re building. Getting feedback from potential customers, from partners and from people who make a living investing in growth companies. It all adds to my understanding of myself, of our company and of our product.

One thing in particular that struck me and made me want to write a brief post was a conversation I had with a partner of a venture fund last week. How we have made the same fundamental analysis but have arrived at very different results. Because the variables we put into the equation were slightly different.

This VC has other investments in online advertising, so they have a pretty good feeling for the space. They had discussed unIQad at their partner meeting and he had some concerns that he wanted to share with me. Basically, he said, they were afraid that we were late to the party. That the market was already saturated and that incumbents were going to be very hard to unsettle. That it had become a game of scale and it would require too many resources to take market share.

If you look at online display advertising as the market it is today, I suppose that I would find it difficult to disagree with their analysis. Take a quick look at the LUMA Scape below, which I have snatched from here. It’s a hugely complex landscape constantly evolving. It’s insanely competitive.

So why did I disagree with them? Well, simply because we have put different variables into my equation that they did into theirs.

We see our customers differently. We see our market differently. We see our competitors differently. Maybe it’s a naïve and immature way of closing our eyes to the obvious failure we’re walking into. But maybe it’s that conventional wisdom is the wrong lens through which to view unIQad.

Studies from Econsultancy and Forrester Research show that around 3% of online retailers are leveraging the benefits of retargeting while 73% say that it’s a priority for them to start doing so. That doesn’t sound like a saturated market to me.

If we were competing for the same Top 1000 global advertisers that the rest of the LUMA Scape is hunting, then I’d agree. It’s cut-throath. But what if you look at the retailers that are outside the Top 1000 bracket? There are endless amounts of them. The people who don’t use Responsys or ExactTarget for their email nesletters but use MailChimp or Constant Contact. The people who don’t use ATG as their commerce platfor but use Magento.

So – from our perspective, we’re not so much in the display advertising market. We’re in the “get-more-customers-market”. And we have decided that the way we compete in this market is to help medium-sized webshops punch above their weight when it comes to bringing back visitors that didn’t convert in their initial visit.

Close to zero of the vendors in the LUMA Scape think about those companies. And if you analyse the market with the LUMA Scape as your reference, you’re going to end up with a conclusion like the one that the formerly mentioned VC arrived at.

unIQad has an ambition to expand the number of online retailers that do display advertising. To leverage the fact that most retailers honestly don’t care about the nitty-gritty of fine-tuning their display campaigns – they just want more customers! At the moment they don’t use retargeting to get more customers, because getting started with retargeting is complex, time-consuming and expensive.

That’s the pain we’re trying to make go away.

Sometimes it’s the subtle differences in your perception of the variables in the equation that lead you to vastly different results.

A minute of your time is worth a thousand of ours

The other night, the founding team of unIQad was pulling (yet another!) all-nighter. We were planning the next sprint of our beta-release (due in mid-December) and were loudly debating some tough decisions on the user interface.

Maybe it was too much coffee. Maybe it was too many late nights in a row. Maybe it was that he momentarily lost sight of the big picture. But one of the guys suggested that we inserted another step in our ‘campaign setup’ process. His argument was that it would require a couple of weeks of work on his part to eliminate that step. Maybe I was suffering from the fact that it was late – but I blew up completely.

Everything – and I do mean everything – we’re trying to do at unIQad aims at making things quick, simple and easy for our customers.

To provide a bit of context: I believe that nearly all software companies make exceptionally poor decisions when faced with a choice:

1. doing something that’s difficult for themselves but would make life easier for the user
2. doing something that’s easier for themselves but would make life harder for the user

Because we all don’t have enough time or resources, we want to be efficient. We want to put out more features. We want to cram as much as possible into a sprint or a release. Which is good. But it ends up being the wrong things that we cram in. We end up making decisions that make it easy on ourselves but hard on our customers. Idiocy in my opinion. But I've seen a lot of it.

And the worst part is that we tend to hide behind cover-up-arguments. The most common one is that when placing an additional burden on the user (instead of really really solving it and making difficult decisions in the PM and engineering team), we say that it’s because we want to give the user ‘more flexibility’. That’s complete and utter bullshit. In 99 times out of a hundred, it’s because the PM and engineers are either lazy or stupid. Because they’re afraid to make a bold decision.

The truth is that users very rarely want flexibility. The truth is that there are only a small fraction of things in using a software that requires flexibility. Maybe 0.1%. The other 99.9% of the time, a user (a consumer or a business user, it’s essentially the same) wants simplicity and speed in consumption. They’ll live with reduced flexibility and love it, if it makes life a little bit easier and simpler. I’m not even going to mention Apple in this context, but the truth is that there aren’t a lot of other really good examples. The main reason being that it’s really hard to do.

So – back to my René Redzepi moment. Probably didn’t win me the “Boss of the Year” award, but it made a good occasion to re-iterate the most important thing about unIQad. What our architect was suggesting was that we let the user do a little more work to save ourselves a lot of work. And in my rant against his idiotic suggestion, I ended up screaming that “if it takes a hundred hours of your time to save one minute of a user’s time, it’s the easiest f#%&€… decision we’ve ever had to make”.

We spent a couple of more hours discussing and came up with a kick-ass solution. One that will take a long time to develop. But one that will save our customers' time.

And that’s it, really.

Having thought it through, it still rings true. I’d like to think that the people at unIQad are neither stupid nor lazy (in fact, they're pretty amazing!), so I’ll leave the poor choices that come from those characteristics to others.

Think about what you do at your company when you’re faced with a similar decision.

Do Marketers And Their Agencies Bore Too Easily?

Earlier this week I read this article on how social media is disrupting the well-established framework of Paid, Owned and Earned Media. Reading it I found myself agreeing a lot with the author. Hell, I even tweeted a link to the article. But somewhere along my reading, I came across this quote from a VP of planning from Razorfish, saying that he ”often finds himself “frustrated by the rigidity of the buckets”. Really? Maybe Razorfish and their clients are all cutting-edge marketers who have adopted the framework in all they do from budgetting through organisational design. So now, it’s no more web team, CRM guys or acquisition budget? I seriously doubt it. It’s certainly not the case in the companies or agencies that I’ve worked with. But the thought leader from Razorfish is clearly fed up with the constraints of this ’old and tried’ framework. I wonder if his clients are feeling the same way?

This made me think about a conversation I had a couple of months ago. It revolved aorund how small-to-medium-sized webshops are missing out on a lot of marketing best practises because they lack the resources and don’t have the option of hiring expensive agencies. Also, the business model of the agencies seem to discourage most business owners, which was also the fundamental claim in my blogpost Broken Agencies. Anyway, that’s not the topic of my ranting this time. What is however, is the fact that the person I had the conversation with disagreed strongly with me. He is an brilliantly smart guy and a pioneer in digital marketing and technology. He was o none of the first Google task forces on web analytics – you know the guys that were flown around the world to do projects on web analytics and search engine marketing before anyone had dubbed it SEM. That was back in the early 2000’s. He didn’t believe that the majority of people having a business online are not savvy digital marketers. But most of all – and this is my claim – he had just talked and worked with the concept for so long that in his mind it must had turned mainstream by now. He didn’t realise that he (and I) live in a bubble where we only speak to people that almost do the same things as we do, read the same blogs and industry newssites as we do and talk about the same things that we do. That doesn’t mean that everyone else does.

Maybe the CMOs of Razorfish’s clients read about Paid, Owned and Earned media two years ago like the rest of the digital marketing industry. We were excited and talked about what it could mean if it became the standard by which we started working – and that was it. We talked. I doubt that the CIO/CTO, the CFO or the CEO of Razorfish’s clients read or talked about it. And I doubt that a lot of their clients reorganised their teams or their budgets. So I think it ended up sort of a ”flavor of the month”. Some persistent people still talk and write about it consistently. One of my favourites is Sean Corcoran of Forrester Research (link)

To me it seems that almost everyone in digital marketing – whether it’s the techies or the marketers – are way too busy chasing the next big thing rather than making interesting concepts sustainable.

What Are We Missing Out On?

To begin with, our clients run the risk of missing out in a big way. If we spend our time and energy getting them excited about something – like the Paid, Owned and Earned Media framework – but abandon it before it actually reaches a certain level of adoption, it never gets implemented. And few or no companies reap the benefits of what could potentially be exceptionally valuable. That’s not the role you’ll want as an advisor. You end up a court jester rather than driver of business value. There’s a good reason why that’s a very sustainable debate about marketing’s role in the organisation – if we hype something for 3-6 months only to abandon it once something new and novel comes along, we’re going to remain the joke that marketing still is in many organisations.

And what about the times when a concept actually cathes on and goes mainstream. Then there’s a sub-industry being built around it. And wouldn’t it be a shame to be the ones putting resources into getting the party going only to leave it once the guests are starting to have a good time? Trust me – just because it’s getting a bit old to you, it doesn’t mean that there isn’t serious money to be made there. On the contrary, it’s when something reaches wide adoption that big money starts flowing. Both when it comes to technology and agency advise.

Why Does It Happen?

The macro-explanation has to do with a culture that incentiveses and urges shorter attention spans in general. Everything from 140 characters on Twitter through multiple devices being used simultaneously (working on a computer while listening to music while tweeting on a mobile while…). We get trained to not pay too much attention to anything and to abandon it if there not constant and instant gratification in it.

Of course that’s a very high-level explanation that hints to the underlying reasons but doesn’t really explain anything specifically.

A more digital marketing industry specific explanation is that the industry has a tendency to build certain individuals up to be considered thought leaders on a given subject. In an age of a social media culture there is both emotional and personal reward in achieving a ’guru’ label as well as money to be made giving keynote speaches and hosting workshops on a given topic. And because that individual is supposed to be ’visionary’ and a ’guru’, it’s almost a prerequisite that whatever is said should lack substanse.

I think that the underlying assumption that drives this behavior is complete bollocks. The assumption is that senior agency staff have an obligation to always be bleeding-edge innovative. To always know about the early-curve developments. Unfortunately they translate that into not really doing anything very well or sticking with anything for very long. The reason why it’s wrong is because clients (or anyone under pressure to deliver real business performance) aren’t looking for ’new and novel’, they’re looking for ’solid and with impact’.

The cutting-edge people are so tired of talking about social media campaigns. Now it’s all about Gamification. But the truth is that less than one in ten companies have done anything in social media beyond a few Facebook ads. And of those ten percent that have, less than one in ten have been successful. So acting like kids that are bored with their toys doesn’t do anyone any good.

What Do We Do About It?

The short answer: stop acting like spoilt kids. Tough it out until you know what you’re doing, not only until you kind of know what you’re talking about.

When you know enough about a subject to really understand, you’re probably ready to preach, educatte and inspire your clients. When you’re nearly fed up with the subject, you’re probably ready to start spending your clients’ money on it. When it getting awfully trivial, when you’ve made a success or three and when it seems that everyone else is doing it too, your probably ready to deliver actual value to your clients.

It might not be what earns you a Gold Lion in Cannes, but it sure is what earns your clients a retur non their investment.

Coffee

In my last post, I wrote about some of the thoughts and worries stemming from all of the sudden getting up in the morning not having a well-defined mountain to climb. I've always worked pretty hard and focused on achieving something. Now there is the freedom associated with having a blank canvas but also the pressure of having to now invent everything myself. And perhaps most importantly, the very real fear of not being able to support myself and my familiy in a not so distant future.

Since my last post – and that’s roughly two weeks – I’ve tried to remove some of the immediate barriers that were perhaps getting in the way of thinking about things in the right way and in the end making good decisions. The big one was of course, if I screw around for a while sorting out what I want to do, will I run out of money, build an enormous debt and never be able to pay the rent and put food on the table again?

Some might say that ”of course you can always get a job”. But I have to say that the psychology in all of this is surprising. Rationally, I know that there are things that I’m more than half-decent at. But that’s not the same as knowing – not thinking or hoping but knowing – that you have options.

So – I decided that getting a realistic overview of my options was required to allow myself to focus on what I really want to do. I couldn’t really commit to exploring my various ideas if I was spending half my time thinking about how my decisions would drive me into personal bankrupcy.

Thus, I did what the title of the post suggests. I had some coffee. I called people in my network, professional as well as personal, and asked them to give me perspective input on my situation. It was genuinly a heart-warming surprise to learn the extend to which people were willing to take time out of their schedules to see me and how they were all committed to providing honest advise and help. The purpose of my writing this is most definitely not to paint a picture of everyone jumping through hoops to do me favors. But I believe that the level of flexibility and creativity from myself and some of the people in those conversations revealed some ways of achieving part of the economic certainty that I think I needed while keeping time free to explore the option of launching my own business.

Ideas – maybe not so creative or innovative in hindsight – ranged from getting a desk in an office with smart people to talk to and bounce ideas off of as opposed to sitting at home staring at the wall, over reasonable and constructive ways to cut costs in our private life, through to offers to do various sorts of freelance work to boost my finances and thereby providing a longer timeframe to get my own thing off the ground.

Right now, it feels as if it did the trick. I got the peace of mind that I was looking for. And I got some interesting follow-up conversations to perhaps execute on some of the ideas conceived during the talks.

More importantly I had some really long talks with my wife. About what we want to do as individuals and as a family. What we’re willing to sacrifice in the short term in order to achieve what we want in the long term. About the sacrifices that one person makes in order to allow the other to feel comfortable. About the pressure I’m putting her under by not providing an income right now. About what entrepreneurship means, not only to the entrepreneur but to those around him. This is without a doubt the most important aspect of removing uncertainties and doubt in my mind: to be able to talk to her and genuinly agree on what WE want to do.

What’s the lesson to learn from this story? Not sure if there is a generic one, but for me it is very much about being honest with myself about what keeping me from doing what I should be doing and then removing those barriers. At a later stage, it’s probably something entirely different (and harder to do) but for now, asking people who know me for help and advise provided just the peace of mind that I needed to keep moving forward instead of feeling forced to play safe only to regret it in two months. Having honest and difficult conversations with my wife helped realise that we are both willing to sacrifise a whole lot economically speaking for me to pursue entrepreneurship. Sure, I’d be doing that also to make money, but statistically I’m not very likely to. So the process of trying is what must drive it, not just the dream of the gold at the end of the rainbow. Arriving at that conclusion together I think will prove essential later on when things get tough.

And by the way, it feels as if one of these previously mentioned ideas is taking shape, so I might be writing about that sometime soon.

Now What?

Just over three years. That was what it amounted to for me at Agillic. Now I’m ”taking time off” to use an already tired cliché. My time with Agillic has been pretty eventful: I was hired to facilitate fairly significant change following a few years of not hitting targets. As anyone who has ever been involved at management level in a VC-backed company will know, those kinds of owners are pretty tough on failure, so I was part of a new management team consisting of the technical founder serving as CEO, a new CFO and myself serving an oddly undefined role spanning strategy, business development, operations and running the commercial organisation. In essence anything that wasn’t directly related to product development was under my wings. It’s been a huge challenge and a lot of fun. I’ve been responsible for developing a new corporate strategy, a new go-to-market model, and a new customer support model.  I’ve shut down sections of the company that didn’t make sense in the context of the new strategy – in essence having to let people go or re-assigning them to new roles. Some of them very talented people that just didn’t fit into the new model but who have gone on to deliver lots of value in new positions. And I’ve had the fun of also building the new teams to execute that new strategy. I’ve made hopeless mistakes of hiring wrong people because of time-pressure, inexperience and other factors that – at the end of the day – aren’t really excuses at all. And of course have had to fire those that fell victims of my recruitment inabilities. But I like to think that I’ve learned from those mistakes. I’ve also hired exceptional people, who have helped transform the operation and put the company on it’s current positive trajectory with two (soon to be three) years of +100% year-on-year revenue growth and a positive bottomline.

So – why did I leave if it was all so great? Well, the big change had been made. We had developed a new sales channels with digital and direct agencies that’s working (over coffee last week, the Danish CEO of a large network agency let slip that Agillic had definitely changed the way that the Scandinavian market does CRMin the digital age – I’ll take the liberty of calling that a big acknowledgement of our achievements). Our UK managing director, Turlough Martin, and his team are - after a start that was a lot tougher than it looked in my powerpoint presentation to the board before launching – doing great and are adding new clients to the list every month. Our Partner Support team is well-established and are delivering outstanding customer satisfaction ratings. The business is fundamentally working. So after long discussions with the CEO and founder, Carsten Hyldahl, is was becoming evident that the time to move on was now. Genuinly after mutual understanding. Really.

Back to the opening question: Now What?

In short, I feel like the time has come to try being the boss. At Agillic I was running the shop with Carsten in what was always a very very close partnership between two people who spent many hours a week debating and arguing about the direction and decisions. But at the end of the day there’s only one person making the final decision. In Agillic’s case it was Carsten. And now I want that to be me. Obviously, there are many ways of getting to be in charge. There seems to be broad agreement among the carreer advisors that I have spoken to that I’m not yet in a position to fill a CEO role with a large global company – bit of a blow to my success-inflated ego. The short route is to start your own thing. So I’m giving that some pretty serious thought.

When you spend a few years in the technology space you get exposed to so many people and ideas that you eventually tend to get a few of your own. I’m no exception. So far those ideas have been sitting in a drawer at home, but I’ve spent the last few days going through them and speaking to a few select individuals about some of them. It feels exciting, even exhilarating. I think that one or two of them might have legs if further developed and enhanced. Are they mind-blowing technical innovations? No. Are they pragmatic ideas for solving big needs in the market in a new and novel way? I think so. And that’s what feels so damn exciting. But is also feels like jumping off a huge cliff. So the rational part of me is trying to be as cynical and analytical about my own ideas as I’ve been about clients’ or colleagues’ ideas in the past, trying to figure out if one of my ideas have the potential to become a business. The emotional part of me is screaming that it’s the certain route to endless debt, sleepless nights, a divorce and all other things awful and terrifying.

Weighing the comfort and security of a monthly paycheck against the almost uncontrollable urge to give myself the challenge of putting my self-perceived greatness to the test. It’s scary stuff.

As I’m sure it’s fairly evident I’m undecided. But writing a few words about that uncertainty is supposedly therapeutic and in this social media age any idiot with a blog is a writer, so here it is. Maybe some of you have been going through the same thing and find a bit of comfort that you’re not alone. If that’s the case, please share your thoughts.

Either way, I hope to keep posting as my thinking matures. In the meantime, feel free to reach out if you have thoughts, ideas or questions that you want to share.

Broken Agencies: but there's still hope

Having filled different roles within the marketing-sphere, I believe I have earned the right to have an opinion on the matter of agencies. I have worked for a number of years at a couple of them, I have been a client of a few, I have been a supplier to a whole lot. And I have met a discussed the nature of the agency business with nearly a hundred senior-level executives at agencies across Europe. I’m definitely not claiming to have seen it all or know everything. But I’ve seen enough and know enough to have a fairly educated opinion. If you’re still reading, this is the part where I’m going to start expressing that opinion.

Hype-Cycles of New Agency Types
One thing that I have noticed over the past years is how odd hype-cycles cover the fact that agencies as an industry aren’t creating a whole lot of value for their clients. First digital (or interactive) agencies took the headlines and part of the budgets – and everyone wanted to be more digital. A whole wave of digital flooded the industry with ‘traditional’ agencies buying digital shops, building internal teams and everyone arguing on the best universal solution. Advertisers basically just wanted campaigns that worked. But weren’t getting that because the so-called creative agencies were too busy arguing that the new digital ones didn’t understand communication and the digital shops were too busy whining that the creative dinosaurs couldn’t possibly fathom the nature of technology or how people were consuming interactive content on interactive channels. The dust seems to be settling on that whole debate, finally. In part because some people have been paid off to keep their mouths shut (their agencies have been bought or they have gotten high-profiled jobs at those agencies they used to bash for not ‘getting it’) and the old lot have realised that the nerdy kids were kind of right – developing engaging content for digital channels isn’t the same as doing a 30-second TV ad. Good stuff for everyone. Maybe advertisers can get semi-decent campaigns again now that the geeks and the artists have decided to try and play nicely. Not that they’re doing it yet but they’re trying-

But for those with a nag for drama, there is still hope. Because along came the SEARCH agencies. And they weren’t just search agencies. They were either ORGANIC search or PAID search. And fuelled by Google, they were the greatest thing since sliced bread for a few years. It was all so unbelievably specialised that no one could do a good enough job except for those that were 100% dedicated to doing only search. Now (nearly) all the big agencies have a search department and (nearly) all the big agencies realise that this is important. They haven’t really tied it together in an integrated planning process (sure, on powerpoint they have but in real life...) but that might happen some day.

Along came social media agencies. Same story. The good ones will thrive for some years before expanding their offering beyond social. The almost good ones will get bought by big independents or networks. And the crap ones will disappear as quickly as they came about.

Well, that ended up a semi-pointless ranting about stupid inertia in a self-absorbed industry. Which wasn’t entirely the point. Or at least it was meant to have a more constructive point with a bit of forward-looking ideas.

The Agency Business Model Is Fundamentally Flawed
Creative agency, digital agency, search agency, social media agency or full-service agency. They have one thing in common: they all have broken business models. Bit of a statement. So here’s an argument to back it.

For any given campaign, there is a budget of $100. Any campaign will only – only! – yield any effect once it is put near consumers. Whether that happens via a broadcast medium, as socially spread content or something entirely different, it is only when it’s out of the lab (a somewhat lame metaphor for the processes inside an agency when it develops a campaign – I’m mainly referring to creative development here) that it provides value. Nevertheless, your agency makes its money by keeping it ‘in the lab’ for as long as possible. They sell you a number of hours that they will spend developing your campaign. That means that they are strongly incentivised to spend as much time as possible doing so. And consequently, they will try to keep as much of your $100 marketing budget away from where it yields value. Not because they are bad people, but because they are trying to run a business and make money.

The purist advertiser or agency-owner will argue that this kind of thinking is short-sighted or even dishonest. Or even that they don’t do such things! Every agency that is profitable thinks and acts this way. And it should – it’s there to make a profit for itself, not for its client. If the two can both be achieved, that’s great. But don’t think that an agency’s first and foremost dedication is towards making the most of your marketing budget.

Sanity-check my claim by asking yourself a couple of simple questions:
•    When was the last time an agency handed back part of the campaign budget because the creative development was faster and less time-consuming than originally anticipated? Or because they decided you should rather spend some more money buying media?
•    When was the last time your agency turned down your brief for a campaign arguing that you should rather spend that money hiring a few more people for customer service because your churn-rate was way too high?

Honestly, the agency is there to optimise its own business, not yours.

Another thing that continues to baffle me is the complete lack of risk-sharing. The way a client-agency relationship normally works is that the client briefs the agency, the agency comes back with a budget, get sign-off and start working. They might invoice something up-front, they’ll definitely invoice something half way and you can be sure that the second your approval email hits the Client Service Directors inbox, the agency’s accounting department starts doing the invoice for the final amount. The client on the other hand has to wait for the campaign to launch, have an impact (maybe!) on consumers and for that impact to materialise in sales. That might take weeks or even months. And by the time the client knows whether it’s a success or not, the agency has already been paid.

Sure – there has been a certain amount of debate on the topic of performance-based contracts. It almost invariably ends up not happening. Partly because some clients are cowards when push comes to shove. But chiefly because agencies are extremely reluctant. They come up with a long list of reasons why performance-based contracts are malicious, ignorant or impossible to enforce. I am yet to see a convincing argument against performance-based agreements. And I’m not talking about the ones where 10 or 15 percent of the total fee is dependent on development in ‘brand awareness’ or ‘liking’ but something tied to the client’s actual financial performance.

In my view, a serious relationship between a client and a trusted advisor should reflect the responsibility the both assume for the outcome of their common efforts. The client makes very significant investments based on the advice of the agency. The client relies on the work performed by the agency to deliver results that are essential to the company’s current and future success. It would suit the agency to have a bit of skin in the game as well. Looking beyond the obvious (and very real) obstacles associated with a such model – e.g. cash flow for the agency in case of mutual goals being quite long term – it seems inevitable that sensible advertisers will push in this direction and confident agencies will embrace it.

What Is Next?
A global agency like Ogilvy and their global client, British Airways, already have performance-based models in place. Presumably the same is the case for a number of other significant brands. A definite step in the right direction. I don’t know the specifics of the contract, but from what I have been told, there is still a long way to go. However, I don’t think that the evolution will be led by big brands or big agencies. More likely it will come from small, bold agencies working with more nimble, opportunistic brands.

I foresee an immediate future where online merchants will provide the ground on which to practise. They are used to buying e.g. AdWords on a PPC basis, they have affiliate partners and many have CPC or even CPA agreements in place with all types of affiliates, be it display advertising, email or something entirely different. So a couple of small agencies will step up to that challenge. And I predict that having an enormous trickle-down (or trickle-up if you will) effect on the industry as a whole.

And I think it will force agencies to specialise in new ways to compete and profit. Instead of being discipline-specific in their specialisation, they will begin to be niche-industry-specific. Instead of sub-optimising a subset of the marketing budget, the agencies will begin to focus broadly on finding the best way to spend the limited resources available. To the benefit of the client – and themselves as they are dependent on the outcome to profit and grow.

Does this mean that each client will not get the best-of-breed specialist within search, email, web analytics etc.? I think it does. But I also firmly believe that this disadvantage will be far outweighed by the advantage of genuinely having the agency living and dying by the success of its work.

As always – I welcome your input. I suspect that not everyone will agree and I would be delighted if this could initiate a wider debate on the subject, because it’s long overdue.

Are We In A Social Media Bubble?

Econsultancy asked – and to some extend answered – this question on their blog yesterday. I posted a link to the blog along with my opinion and got a couple of interesting comments in return. Thanks for that @klit_nielsen and @4everjong.

I think that we are in fact in a social media bubble, but as Kim Jong (@4everjong) pointed out the size and nature of the bubble greatly depends on your perspective when looking at it. There are three (maybe more – but for now I’ll stick to three) views when analysing whether there is a bubble:

1. Company Valuation – are companies playing in the social media space valued reasonably?
2. Consumer Uptake – to what extend are people consuming social media (and why)?
3. Marketing Opportunities – what opportunities do brands have to take commercial advantage of social media

Company Valuation
First off, let’s look at company valuation in this space. Normally investors look at a company’s ability to make money now and in the future as the reason for putting a given price tag on a company. I say normally, because in the social media space this logic doesn’t seem to apply. A few examples:
The big F first. Facebook haven’t revealed revenue or earnings for the full year 2010 yet, but it seems likely (based on figures from the first nine months of 2010) that they will bring in revenue of roughly $1.5bn and make around $0.5bn from that. Right now employees and early investors are trying to offload some of their share at a $75bn valuation, according to techcrunch.com. So the valuation has a multiple of 50 on revenue and 150 on earnings.
The problem with Facebook’s valuation is that they won’t grow insanely in the number of registered users. Adoption growth has begun to decline, so it’s all about monetising their users now. And with their current ability to do so, it will take them 150 years to pay back their investors. That seems a pretty long horizon for most investors.
Twitter has around 20% of the users that Facebook do. And roughly the ratio on valuation. Twitter turn over somewhere in the neighbourhood of $50m and expect to bring in twice that in 2011, making the valuation a multiple 200 on revenue when Bessemer got a piece of the action earlier this year.
The problem with Twitter is the inertia surrounding it. Three groups of people use Twitter: VCs, marketers and journalists. And between them, they get overly excited and agree on how brilliant it is. It’s not to most people. And the ability to monetise is even worse than Facebook, though Twitter’s audience is more attractive (high income etc.).
The list goes on with examples like Radian6, who got a multiple of 25 on revenue when salesforce.com bought them about a month ago. Great for salesforce.com’s stock price, I’m sure but difficult to see how they are going to get that money back. However, given the claim that we are in a speculative bubble, they don’t need to make money on it, because the stock market rewards them for ‘getting into the social game’ on sheer speculation and empty assumptions that it’s a good thing to do.

Maybe I have all the signs of a grumpy old man – but I’m finding it hard to see why sane people are doing this unless they are speculating in ever rising valuations based on other things than the social media companies’ ability to make money.

One exception (there are arguably more, but this one is just so obvious) is Groupon. They combine what we all love about social media – it’s easily shared, it’s easily consumed etc. – with the other thing we all love (nope, not sex – at least that’s not the one I had in mind) – a good deal. Now Groupon reportedly have a revenue run rate of $800m. Rumours state that they are looking for an IPO at a $25bn valuation, or a multiple of 31. It’s high, but it’s nowhere near as insane as Twitter or Facebook. Because it makes money from the offset and it ties social media to commerce. To actual goods changing hands. Whether it’s services or physical goods, that’s what businesses do. They sell stuff in exchange for money. Period. Anything else is pure speculation and a bubble building.

Consumer usage (not to be confused with businesses’ commercial use of social media)
The simple test here is: are people using social media? They certainly are. And as such there is no bubble in social media as a whole.

However, I think that there are several bubble-like tendencies around specifics within social media. I spoke about Twitter earlier from a valuation perspective. But also from a consumer perspective, relatively few people are active on Twitter in the sense of tweeting. Those that do tweet tend to do it for a while after they sign up and then seize to do it. Because it has its obvious limitations. Active tweeters divide into two categories – those that place value in their tweet and those that use the tweet to promote value outside the tweet, typically linking to content on another site. Why are there few good tweeters that place value in the actual tweet? Well, 140 characters are not much to express something meaningful, so the discipline of articulating something relevant and eloquent is for the few. I’ve tried and I stink at it. But I love it when people tweet well. And like most others, I really hate when people tweet poorly – you know, nonsense about the weather, their kids and all that rubbish. But – what I like most are tweets that link to great stuff. I cannot argue the case for convenience enough (because I’m lazy as hell), but now that I’ve boiled down the people I follow to a small set of people who post quality content, my daily Twitter digest gives me 5-10 links to content that I enjoy. However, it’s hardly ever my friends that post quality stuff.

My point is that Twitter is both relatively niche and relatively sensitive to the fact that the novelty wears off pretty quickly. And similar arguments can be made to just about any other social media phenomenon, whether it's up-and-coming like foursquare or tried-and-failed like MySpace/Second Life.

In my view the only thing that does not have this problem is Facebook. And without going too deep into my analysis of it, I think it has to do with the fact that it reached critical mass quickly. Today most users have way too much social equity invested in Facebook, making it impossible to quit. When party-invites, social gatherings etc. are all scheduled and coordinated via Facebook for the sake of convenience (and not sent via email or text), quitting doesn’t make sense. I realise that there is a much larger discussion around how social media is consumed, but this is not the time or place for me to do that. Buy me a beer and I’ll happily talk about it. Buy me a few beers and I’ll ramble about it for hours. I’m sure you get the picture.

@4everjong made a point that “Social and Mass Media, especially TV, will converge into a new, mashed up media platform during the next couple of years ... look to the progressing integration occurring between social media like YouTube, broadcast networks and the hardware manufacturers who are also content distributors like e.g. Sony and Apple.

Hmmm... OK, I buy that. That’s technological progress enabling manufacturers of content to better distribute content and consumer to better consume content. Great. No bubble there, rather evolution of an existing industry. But I do want to pull the bubble card when I come across claims that (and more importantly when a large group of people start behaving as if) TV as we know it will be obsolete in a year. Maybe in twenty years, but in one? It was probably not what my favourite advertising-dictator-body-double (yes, that’s you Mr. Jong) was trying to say. We are living in interesting times and media production, distribution and consumption is being disrupted. And exploring this, pushing the boundaries of it makes perfect sense and has nothing to do with a bubble.

Marketing Opportunity
Where I’m constantly torn between tears and laughter is the argument of marketing budgets in social media. On one hand it’s quite funny to see the sheer desperation in the eyes of CMOs. And on the other hand it’s utterly disturbing to see the amount of money being thrown at social ideas conceived and executed by people having no idea what they’re doing or why they’re doing it.

I’ve heard people argue, “no no, there are some really good social media agencies out there, who are great at what they do”. All right, I’ll give them the benefit of the doubt and say that on average these agencies are as good as any other advertising agency. That’s not impressive. Ask an advertising agency if they think you should splash a big load of cash on a campaign and I’m pretty sure I know the answer. Ask a social media agency if getting into social is important for your brand – and guess what the answer might be.

A year or two ago the most popular phrase around the marketing world was ‘join the conversation’. Fortunately for the tick I was starting to develop, they’ve stopped saying it. But the popular opinion remains that a brand should have a social media presence, a social media strategy and a social media everything. Most brands shouldn’t. 90% of the products we buy, the brands we see and the things we do simply don’t justify a social media involvement. Toilet paper: I don’t want to spend my time debating how to wipe my arse and I trust that you’ll appreciate that. Even if I do think that Lotus could make theirs a bit softer and leave out the chemicals giving it the scent, I really don’t think that anyone benefits from having those thoughts in the public domain.

If you are a brand that deals within a high-involvement industry, social media is likely to be a much better idea. And then there are tons of nuances as to how you could execute. Is it a sales channel, a service medium, a marketing platform or a human resources tool? It depends and could all of them or none of them. It could be a campaign concept creating a time-constrained awareness and involvement (e.g. The Best Job In The World campaign) or it could be a prolonged, continuous effort (e.g. Twelpforce). Either way, it’s probably more or less case-specific.

And then there are all the in-betweens. All those companies that shift between low involvement and high involvement during a consumption cycle. Insurance is a good example. No one cares about insurance 364 days a year. But that one day when something happens, anything an insurance company can do to be available, to be listening, to be guiding or to be empathic is absolutely the right thing to do. But it requires a really well-conceived strategy on when, where and how to engage in a conversation. Not a bloody company Facebook page.

What I hate is the notion that social media is a big commercial opportunity for everyone. It isn’t. But popular opinion is that every campaign pitch, every campaign brief should have a social component. Wild-arse socially-based ideas win pitches these days and that is a sign of a bubble built around uncertainty, insecurity, ignorance and stupidity in the marketing and advertising industry.

So – two bubbles out of three as I see it. Burst my bubble or inflate my ego further (in which case I can get a gig to be floating over Wembley for the Champions League final next month) by adding your comments. Look forward to it.

The Online Marketing Suite Is About To Happen

The term “The Online Marketing Suite” was introduced by Forrester Research in 2007 – and was updated in a report published earlier this month (http://bit.ly/i5cxA2). The suite refers to the comprehensive set of technologies that enable marketers to develop, deploy and measure digital marketing. In 2007 it included email, web analytics, behavioural targeting, multivariate testing and other types of technology. Since then we have both seen consolidation (e.g. MVT is now in every web analytics package) and we have been blessed with the explosion of social media sites, the rise of mobile and content management systems entering into the marketing arena. And that’s just a few of the many things having happened in the past four years.

When someone is doing extremely well, it’s really hard to make him change his behaviour. To teach him new things, apply new thinking or span beyond the remits of what’s current creating his success. That’s just basic psychology. By definition change hurts and most people only change when the pain associated with keeping status quo is greater than the pain associated with change. This is – in my opinion – the reason why digital marketing practitioners have not been eager to integrate the digital disciplines. Why search marketing has developed as a distinct skill set. The same with web analytics, email marketing and display advertising for that matter. Each of them has been so successful that the potential of integrating has simply not been worth the hassle. Add the financial meltdown and subsequent recession to the mix and you have the recipe for a number of self-sufficient communities that have specialised within their remits rather than reaped the benefits of an integrated approach.

But as the digital industry matures, practitioners begin to look for integration and consolidation. Which was prophetically the topic of my keynote at Internet World (www.internetworld.co.uk) in London last year. This shift has happened and integrated marketing is the new black. Everyone is talking about and some are actually doing it as well. It was the overarching topic of Forrester’s Marketing & Strategy Forum (http://bit.ly/eff5Kp) and Econsultancy launched JUMP (http://bit.ly/elPNKO) as their biggest event ever. The most prestigious award at Cannes Lions is arguably the integrated one. Sapient famously did the global ‘Happiness’ campaign for Unilever. And so on. And that’s the reason it makes sense to talk about a Suite again. Because that’s how marketers are beginning to view the previously fragmented digital efforts and technologies.

At Agillic our entire proposition revolves around joint-up marketing. And two years of consecutive +100% growth (soon to be three) bears witness of money being put towards this as well. I think the million-dollar-question is HOW to achieve it.

In 2007 as well as in 2011 Forrester talks about a Central Hub that will tie together the various technologies in the Online Marketing Suite. In the just-released paper, they go so far as to say that it’s the Central Hub that will be the game-changer. I know that people in the industry throw that term around a lot, but the people at Forrester don’t. So it really is a pretty bold statement. And puts a lot of emphasis on the importance of those companies aspiring to be a Central Hub.

I believe that three core principles will be crucial in taking the position as the Central Hub:
1)    Multichannel
2)    Real-time
3)    Micro segmentation

Multichannel: to orchestrate a suite of tools, the Central Hub must be channel-agnostic. It must be built from the ground up to handle a multitude of different channels and data sources. Partners and customers of Agillic have used our Central Hub to develop campaigns that span ‘traditional’ digital channels like email, sms and websites as well as more experimental ones like Facebook, foursquare, CRM-based display advertising (retargeting and dynamic banners), mobile ticketing and many more. There is a huge difference between adding a bit of sms in the UI of an Email Service Provider platform and having a Central Hub that caters to a plethora of digital channels.
Real-time: the nature of digital marketing requires that data is transferred in real-time. Consumers expect that interaction with a brand in one channel is immediately reflected across all other channels. That the brand website knows when the consumer has clicked on an interesting offer in an email. That the landing page when clicking a PPC ad from Google reflects the context of the ad as well as the history of the individual clicking the ad. That the website remembers what someone was interested in when they last visited. One USP that is emphasised time and again by Agillic clients is the seamless real-time experience that Agillic offers.
Micro segmentation: marketing has moved beyond general segments like ‘b2b leads’ or ‘repeat visitors’. Segments of one might still be an aspiration to most, but that’s exactly the granularity required. Whether it’s the email, the Facebook app (or fanpage), the brand website or the location-based offers being pushed – they must be relevant to ME. They must take into account what I have done, what I like and what I might find interesting. So the Central Hub must consolidate data on an individual level, not an aggregate one. Agillic clients leverage that ability to deliver highly personalised web experiences through individual transactional and behavioural data across channels and do so with great success.

Forrester names a number of companies contending for the Central Hub position. They divide these companies into four categories: web analytics, web content management, email service providers and marketing automation. Web analytics, CMS and ESP’s are forced to find new revenue streams as their legacy markets are deeply commoditised by now, either from freeware (e.g. Google Analytics), open source (e.g. WordPress, Composite) or extremely cheap web services (e.g. Mailchimp). So those vendors are forced to look beyond their current capabilities to continue to grow and profit. I find that Marketing Automation is the category best suited to credibly assume the Central Hub position. Because the nature of marketing automation is to act on data and to deliver relevant messages to individuals. And some actually deliver on the three core principles listed above.

Agillic is one of only three Marketing Automation companies globally named by Forrester as a contender for Central Hub. We’re proud of that and think it’s well-justified. We’ve delivered outstanding value to clients in the past three years delivering on the promise of connecting the Online Marketing Suite.

It will be exciting to see this movement accelerate.

Where do you see things going? How close are you / your clients to The Online Marketing Suite? What other core principles do you see for the Central Hub? This is probably the most interesting debate in the marketing technology space in years and I welcome you to join it. Here or somewhere else.

Strategic Marketing Personas

Terms such as Customer Experience Management, One-To-One Marketing or - recently launched by Forrester Research - Adaptive Brand Marketing have received an increasing amount of attention in the marketing community. The rise of the internet and digital marketing has driven forward the notion that companies can adopt their messaging to better cater to the diversity of customers’ needs. And technology companies are thriving from this macro trend. Whether in the classic campaign management sector or in the online advertising sector, the ability to deliver messages targeted micro segments seems an attractive position for marketers to be in, and thus has allowed technology vendors to prosper.

Disguised as strategic initiatives, these technology vendors and early adopter marketers have been focusing on tactical schemes that look after certain bits of the marketing continuum.

I am a firm believer that the concept of Adaptive Brand Marketing – coordinating the brand experience across channels and over time – has the potential to revolutionise marketing for a wide range of companies. I also believe that it will be driven by (but not limited to) digital marketing. The key to succeeding is to lift it to a strategic level rather than the current tactical level, where the ‘personalisation’ initiatives currently reside.

So – how do we make CMOs embrace this instead of neglecting and outsourcing it to their online or CRM departments? I suggest (re)introducing a proven marketing concept and updating it to deliver on the challenge of Adaptive Brand Marketing.

The Persona Concept – in 2010
A thirty-seconds-history-lesson on personas: It was originally introduced by Angus Jenkinson in 1993/94 and made popular to the digital community by Alan Cooper in his acclaimed book “The Inmates are Running the Asylum”. Personas are fictional individuals created to reflect the core audience of a marketing campaign or a website build. By attaching ‘real-life’ personality attributes to fictional members of the audience, the agency creatives or the developers were able to relate their ideas more easily to the target audience. Will ‘Bill’ think this functionality is fun/useful/user friendly etc.? (thanks Wikipedia)

I propose developing a more extensive approach to the persona concept. One that is strategically founded and spans across the range of marketing disciplines. Personas are meant to include characteristics that contain a) demography, b) attitude and c) behavior. Most CMO target audience descriptions contain mainly quantitative description on demography (e.g. ‘our core customers are high net-worth individuals aged 35-55, living in suburban areas’ or ‘we need to target male students aged 18-25’), since they are more easily articulated to the rest of the C-level management team. Because it translates fairly easily into money.

But in order to embrace Adaptive Brand Marketing, we must move further and this is where I suggest the Strategic Marketing Personas as a concept for doing so.

Building on the three cornerstones – demography, attitude and behavior – defining Strategic Marketing Personas is not only possible but also practically achievable.

For instance, a mobile operator might define a Strategic Marketing Persona as “a high value male customer actively looking for a new mobile phone and who has a positive yet passive attitude towards our brand”. This Persona is strategic, because he represents someone of high value (demography) and a reasonable propensity to buy something specific (behavior) from the particular brand (attitude).

Now, with this persona defined as one of strategic value, the brand (in this case the mobile operator) can begin designing a strategy for how to engage with him. Should money be spent on TV advertising, on loyalty marketing initiatives or on online advertising? That is up for debate – but the point is that by defining these personas of strategic importance and using these as vehicles for prioritization, budget allocation and planning discussions, you get something much richer than your typical demographic segments or your tactical campaign audiences. With the marketing personas, you can define continuous engagement plans that shifts your way of thinking. And allows the CMO to facilitate this from a brand-wide perspective rather than leaving it to colleagues with tactical remits such as CRM or online advertising.

Same s…, new bottles?
Have we heard all of this before? Well, the notion of targeting your marketing messages to the individual is not exactly new or groundbreaking. And the idea of Strategic Marketing Personas is not so much a proposal for a new type of strategy. Rather, it is a methodology to deliver on the promises introduced by concepts like Adaptive Brand Marketing or One-to-One Marketing.

It would be great to hear how organizations are approaching this. So if you have experiences or anecdotal evidence of someone doing it the right way, share.

Where has recent M&A activity left the Campaign Management market?

As the credit crunch loosens its grip on our economy, M&A activity is starting to pick back up. Also in the marketing technology market – even in the campaign management market (for ease of use, it’s defined here as vendors in Forrester’s Wave: “Cross-Channel Campaign Management”), which has been pretty slow in relation to M&A activity in the last couple of years. Sure, Unica made a successful launch into web analytics by ways of acquisition and Alterian made a leap into Web Content Management and Social Media Listening Platform. But no players in the campaign management space were bought by bigger companies.

So, having seen two players being picked up within the last short while is noteworthy and arguably gives food for thought for other players on this playing field. And in the close to it, which is space that Agillic occupies.

First, Portrait were acquired by Pitney Bowes and subsequently Unica by IBM. Two out of eleven in the most recent Forrester Wave on the space, with Unica being generally perceived as the market leader.

Also, Alterian added social media consulting company, Intrepid, to its recent acquisition of social media monitoring platform,Techrigy. Perhaps not a huge M&A that will change the industry, but worth a comment.

Portrait & Pitney BowesI am so happy not to be working for Portrait. This must be a top ten candidate for ‘the worst acquirer for a CCCM company’ title. Every market analysis for the last five years has stated that inbound marketing capabilities and digital skills are crucial. And what happens? A massive print-based company goes and buys Portrait. They only recently went directly into the CCCM space by acquiring Million Handshakes and have struggled to integrate them. Now, Portrait becomes a small piece in a quite big puzzle focused around integrating its analytics capabilities into PB. I think it’s fair to say that enhancing the already limited digital capabilities in Portrait (the quite sophisticated email marketing tool they bought with Million Handshakes) is not the top priority for PB. This certainly leaves Portrait’s claim for fame in this space wanting as Forrester quoted Portrait clients for ‘stressing the need for stronger capabilities in the online channels’. Good news for Portrait’s closest direct competitors, SAS and Teradata, who were competing on data and analytics capabilities. But surely others will benefit as well. Portrait’s campaign management footprint was strongest in Scandinavia (as Million Handshakes was originally Norwegian), so vendors with a strong Northern European presence are likely to be ready to pick up any unsatisfied customers. And of course, there will be a few of those as investments in product roadmap get reprioritized. But in a broader picture, it will not make much of a difference to most marketers.

Unica & IBM
In mid-August, Suresh Vittal and Joe Stanhope of Forrester wrote an insightful blog on this acquisition (http://blogs.forrester.com/joseph_stanhope/10-08-13-suresh_vittal_and_joe_stanhope_consider_news_ibm_acquiring_unica) pointing to the very obvious conflict between Unica’s NetInsight and the recent acquisition of Coremetrics. My key takeaway from that: IBM are not fools and have not paid a stupid multiple on revenue from a product, where they already owned an equally strong competitive product. So with roughly 125M USD of revenue in 2009 and a sales price of 480M USD, multiples are close to 4. And perhaps more than four for the actual campaign management business. Interesting if you are VC-backed company in the marketing automation space. Such as Agillic (figured I’d make sure everyone got it).

But back to Unica, its customers and its competitors. As with Portrait, the acquirer’s commitment to the acquired company’s product roadmap is to be questioned. IBM has acquired Cognos, iLog, Lombardi, Initiate, SPSS, Sterling Software, Coremetrics, and now Unica since 2008 (thanks, Suresh and Joe), so investments in integration with current IBM marketing technology suite are likely to be made before investments in further enhancing Unica’s own suite. Unica have made a number of small-to-medium-sized investments in a strong strategic move to broaden its offering across the spectrum of especially digital marketing. Integrating these acquisitions seamlessly into the Affinium suite is a task not yet completed if customer testimonials and industry analysts are to be trusted, thus leaving Unica’s future competitiveness weakened. At least in the short-to-medium-term. Obviously, tapping into IBM’s customer-base will propel Unica ahead in the campaign management space and hopefully IBM’s entry will change the dynamics in the space in the long run. One likely outcome is further consolidation if ‘IBM-size’ muscle is going to be a ticket to compete in the space. I’m guessing that Alterian, Neolane and Responsys are all hoping this will be the case as they are probably the most likely targets for acquisitions.

Another possible outcome is that the differentiation within the space increases and is split into two macro segments: An enterprise-focused segment consisting of Unica/IBM, Portrait, SAS, SAP, Oracle, Infor(Epiphany) and Teradata focusing on enterprise applications and an end-to-end (or one-stop-shop if you prefer) delivery from one vendor. Of course, this segment will continue to pay attention to online capabilities – but not nearly as much as the other macro segment, the SaaS-focused segment. This segment, made up chiefly by Alterian, Responsys and Neolane but with potential new entries like Eloqua (currently all B2B) or salesforce.com (also mainly B2B), is likely to spend much more of its energy on integration with numerous digital applications. Responsys recently announced a partnership with eCommerce platform, eCommera, and other similar initiatives are being launched by other players. At Agillic, we are piloting a number of new applications in collaboration with key partners, including an eCommerce app, a CRM-retargeting app and a cross-channel advertising and marketing analytics app. Our partners have already made integrations with Facebook, foursquare and adservers. So I’m guessing we haven’t seen the last of this. From a personal point of view (or a “PVTS Point-of-View” if you will) I find this segment to be not only much more dynamic and interesting, but also much more in touch with marketers.

You can argue that there are two approaches to developing technology. You either build moats or you build bridges. The first approach is classic enterprise thinking: you try to cut out other applications and build a self-sufficient entity within your moat. You acquire if you find your proposition to be lacking. The other approach is SaaS. You have a number of API’s and allow for easy integration with other systems, because you realize that your technology can never be sufficient in a world that evolves and develops so damn quickly. Needless to say which one I believe in.

Alterian & IntrepidAlterian’s acquisition of Techrigy (which became a product labeled SM2 in the Alterian suite) was a bold move into social media and the first of companies in this space to venture into this territory. Predominantly, social media is a space occupied by creative agencies and technologies that are either custom-built or tailored to cater to these agencies’ needs. So a gutsy move by Alterian. But might also be an explanation why they have not had a lot of success in getting the traction they had hoped for. Insiders have led me to believe (there you go, the first bit of industry gossip even though I tried to steer clear of it) that SM2 has been very hard to get off the ground. Retrospectively, it makes sense: brands want to buy hyped social media services from cool, young, groovy and creative people. Not from MSP’s who are what Alterians partner network consists of. There are lots of great things to be said of MSP’s, but cool and groovy are not amongst them. This makes the Intrepid move seem logical. But it also jeopardizes Alterian’s quite successful MSP strategy as they in theory start competing with the MSP’s for services. Maybe their analysis is that the MSP’s were never very interested in SM2 anyways, so no channel conflict. Let’s hope so – for Alterian’s sake.

I suppose the question is whether acquiring Intrepid is another bold and offensive move or a desperate and defensive move to try and get some kind of value from a poor investment. I’m not quite decided. But one thing is for sure: if my previous hypothesis of Alterian being a potential acquisition target as the market diversifies to include a more clearly defined high-growth SaaS segment to which Alterian belongs, then I would be a pretty concerned Alterian shareholder. Why? Well, multiples for a services company (Intrepid) is about 20% of those of a SaaS company. So, potentially Alterian just sliced their valuation quite significantly. But of course that’s very speculative.

On a final note: Since the SaaS/online segment would be smaller but with higher growth figures, it would suddenly appear more interesting to various types of investors. Or at least there are a few of us in Agillic, who would hope so.

As always: share your thoughts on the above.